Welcome to the Thursday edition of the Crypto In America newsletter!
What you’ll read: A handful of legal battles are drawing unlikely allies and familiar rivals. Plus, Figure’s President of Digital Assets Reid Simon challenges Wall Street’s tokenization talk, and the headlines you need to know.
Washington and Wall Street Back Industry Challenge to Illinois Crypto Tax
Illinois’ crypto tax is facing a deepening backlash, with the Justice Department and major business groups joining the industry’s fight to block it.
The DOJ, U.S. Chamber of Commerce and Wall Street trade group SIFMA submitted filings supporting the challenges brought by crypto trade groups The Digital Chamber and Illinois Blockchain Association, which sued first, and the Blockchain Association and Crypto Council for Innovation. The cases have since been consolidated. An 18-member coalition led by DeFi Education Fund, a16z, Paradigm and Uniswap filed a separate amicus brief Wednesday.
The tax is making for strange bedfellows. SIFMA and DeFi advocates have spent the past year clashing over how to regulate decentralized finance, particularly whether noncustodial wallet providers should be treated as brokers. But they agree Illinois is singling out crypto for a levy that traditional assets don’t face.
Signed into law by Governor JB Pritzker in June, the measure would impose a 0.2% charge on the full value of digital assets Illinois customers trade, transfer or store through brokers, even without a sale or profit. A court order pushed its January 1 start to July 1, 2027, to allow time for the legal challenges to be heard.
The U.S. Chamber and SIFMA warn the tax would also hit banks, brokers and asset managers, requiring costly new compliance systems and exposing firms to potential felony penalties for violations. The DOJ argues it undercuts federal policy supporting digital assets.
The DeFi coalition’s argument comes down to a familiar battle line: control. It says noncustodial developers shouldn’t be treated as brokers required to collect taxes from users whose money they can’t access and whose locations they can’t determine.
“Those actors have no customers to collect from, no assets to remit from, and no way to know where a transaction occurred,” its brief states.
Crypto Firms Rally Behind CFTC in Stock Perps Fight
Coinbase, Kalshi and Kraken parent Payward are pushing back against an effort to block U.S. trading of single-stock perpetual futures, contracts that let investors bet on a stock’s price without owning the shares or facing a fixed expiration date.
Joined by DRW Holdings, Jump Trading and Paradigm, the firms submitted an amicus brief backing the CFTC against the Capital Markets Alliance Association’s bid to halt trading. The alliance, backed by Cboe and Citadel Securities, sued the agency last week after it allowed the single-stock contracts to move forward.
The fight boils down to how the contracts are classified. The alliance says stock perps are security-based swaps under SEC jurisdiction, while the firms argue they are security futures under joint SEC and CFTC oversight, and that removing an expiration date doesn’t change that.
The battle also highlights growing tensions between fintech firms and Wall Street’s old guard over who gets to compete as new products like stock perps enter the market.
“CMAA’s members could offer that better product themselves; instead, CMAA sued and sought emergency relief to keep it off the market,” the firms argue.
SCOTUS Petition Aims to Answer One of Crypto’s Oldest Legal Questions
A fight over life insurance investments could put one of crypto’s biggest legal questions before the Supreme Court. When does buying an asset mean buying a security?
Investor Choice Advocates Network, a nonprofit legal advocacy group, and law firm Paul Hastings have asked the justices to settle a decades-old disagreement among federal appeals courts over whether work done before a sale can make an asset an investment contract, or whether buyers must rely on someone’s future efforts to turn a profit.
“Whether something is a security shouldn’t depend on which courthouse the SEC picks,” said Nicolas Morgan, founder and president of ICAN Law and a former SEC senior trial counsel.
ICAN and Paul Hastings represent three sales agents the SEC sued in 2015 for selling unregistered securities and acting as unregistered brokers. They were later ordered to give up their commissions and pay civil penalties, though none was accused of fraud.
The question of past versus future work gets to the heart of a debate crypto has wrestled with for years, and one the current SEC has begun addressing through its guidance and rulemaking proposals. Can a token sale qualify as a securities offering based on work developers have already finished, even if buyers aren’t relying on them to do anything more? The petition argues that buying a token on a network that’s already built out, without relying on further work by its developers, is different from investing in a project whose success still depends on them.
The Supreme Court hears only a small fraction of the cases it’s asked to review each year, so there’s no guarantee it will take this one.
Is Wall Street Serious About Tokenization?
This week on the podcast, Figure’s Reid Simon joins us to explain why much of Wall Street’s tokenization talk is “lip service” and why putting a big name on an onchain product doesn’t automatically make it useful.
We dig into where the technology could actually make a difference, including whether bringing loans onchain can cut costs for lenders and make borrowing cheaper for homeowners. Reid also shares lessons from the crypto lending failures of 2022 and how Figure is preparing for a potential swing of Washington’s political pendulum back against crypto.
Catch the full episode on all platforms here.
News Flash
Jensen Huang Resigns as Nvidia CEO: Nvidia’s co-founder stepped down Thursday, with CFO Colette Kress taking over as interim chief. Shares are trading lower as investors weigh the departure of one of the biggest figures behind the AI boom.
Hot Inflation Adds to Bitcoin’s Troubles: Bitcoin is still hovering near a three-month low after October inflation data came in above expectations, reinforcing concerns about a Fed rate hike in December.
OKXICE Sets November 23 Launch: The joint venture between crypto exchange OKX and NYSE parent Intercontinental Exchange plans to launch tokenized trading under the SEC’s Innovation Exemption, with ETFs and crypto-linked stocks dominating the lineup.
Formation Targets Early 2027 Launch: Formation Securities notified the SEC of plans to operate a tokenized securities venue on Solana, with three crypto-linked companies already agreeing to participate.
NYSE Taps Avalanche for Tokenization: Avalanche will power clearing and settlement at a planned NYSE-affiliated tokenized securities platform designed for round-the-clock trading.
Strategy and Metaplanet Dropped From MSCI Indexes: The crypto treasury companies will exit MSCI indexes on November 30, following months of debate over whether digital asset treasury companies belong in the benchmarks.
Stablecoin Supply Sees Biggest Contraction Since 2022: Stablecoin supply fell by $14.2 billion over the past month, with USDT and USDC accounting for nearly $11 billion of the decline.
Gemini Reportedly Sells UK and European Businesses: Gemini has sold its operations in the UK and Europe to global stablecoin payments firm KAST for less than $10 million, according to CoinDesk.
DTCC Adds Solana to Tokenization Plans: Wall Street infrastructure giant DTCC plans to bring tokenized securities to Solana in the second half of 2027, with Stellar integration expected in the first half. The service is already live on Canton and DTCC’s private Besu network.
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